Business expense made on personal CC

qak10 · ‎December 06, 2023

There was a business expense put on a personal credit card by mistake. The business owner (sole employee) wanted to be sure that the expense was tracked on the P&L, so we manually added an expense (while all others are automatically entered through the bank feed). This worked to account for the expense on our P&L, but now our balance sheet is showing a balance (liability) on this throwaway "Personal CC" account. The charge to the personal CC was not paid off by the business CC, it was paid off by the owner with his personal checking account, which is not tracked in Quickbooks. How do we clear this off the Balance Sheet?

ChristineJoieR · ‎December 06, 2023

Hello there, @qak10. To clear off the balance sheet of a throwaway "Personal CC" account, which was used to pay for a business expense,

You need to delete the journal and create a new one in QuickBooks Online. Doing this will remove the liability from the balance sheet. You can follow these steps on how to enter a journal entry:

Here are the steps to delete a journal entry:

Select Settings ⚙ and then Chart of accounts (Take me there).
Find the account you created the journal entry for. Then select View register.
Find the journal entry in the account register. The word "Journal" should be in the Ref No. or Type column.
Select the journal entry to expand the view.
Select Delete.
Select Yes to confirm.

You can follow these steps on how to enter a journal entry:

Select + New.
Select Journal Entry.
On the first line, select the expense account for the purchase.
Enter the purchase amount in the Debits column.
On the second line, select Partner's equity or Owner's equity.
Enter the same purchase amount in the Credits column.
Select Save and Close.

You can also consider getting some advice from your accountant to keep books accurate and expense accounts to use. Do you want to have one? Visit this article: The ProAdvisor Program.

Let me know if you have other concerns about managing your expenses. I'll be here to assist you again. Have a lovely day.

Rainflurry · ‎December 07, 2023

@qak10

Yikes. @ChristineJoieR 's advice of: The journal entry should debit the expense account and credit the "Personal CC" account. Then, the owner should create another journal entry to credit the "Personal CC" account and debit the owner's equity account. Doing this will remove the liability from the balance sheet. will not work. That will reduce the owner's equity and double your liability.

If the original entry was made using a journal entry, change the credit line to the owner's equity account. Otherwise, delete the original entry and create a new journal entry: debit expense, credit the owner's equity account.

qak10 · ‎December 15, 2023

Wow, that easy. Thank you!

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Business expense made on personal CC